Bugs in your protein bar: are edible insects the next food craze?

As a water planner in Utah, Pat Crowley had grown frustrated that his message of conservation was being largely ignored by an agriculture industry intent on siphoning off the Colorado River to keep crops in California and other Western states succulent.

Then a few years ago, the 34-year-old whitewater rafting enthusiast was listening to a TED talk on edible insects, which touted the critters as a surprising potent source of protein. The more he heard about the potential water savings from swapping insects for traditional protein like soy and grains, the more he realized it might be time to change professions.

After toying with farming insects in 2011 for animal feed, Crowley, his wife Erica Koltenuk, co-founder Dan O’Neill and several friends set up shop in a local restaurant in Salt Lake City and began experimenting with making flour from crickets. Yes, crickets-- through a process whereby the bugs are roasted, ground into a powder, and added to a mixture that also includes organic dates, nuts and spices.

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A year later, they unveiled Chapul cricket bars, the first-ever energy bar made from cricket flour. The bars, each containing the equivalent of 25 crickets and claiming to contain twice the protein of their competitors, are now in over 200 health food, bike and extreme sports stores nationwide—the latest being Colorado-based Natural Grocers, a chain of 100 stores in the Midwest and West.

“I decided to create a consumer product that would make it a very easy first step for people to try insects in a way that wasn’t a novelty but incorporate it into a staple food – make it more of a nutritional product,” says Crowley, who has long blond hair and bears a passing resemblance to the late Kurt Cobain. “This was definitely a mission-driven endeavor. It turns out the market has been responsive to it.”

The bar got a huge boost when Crowley, dressed in a Chapul T-shirt and carrying a container of crickets, was selected to appear in March on the entrepreneur show Shark Tank, the hit business competition show on ABC in which entrepreneurs pitch their ideas to a panel of judges. After initial reactions of “you gotta be kidding” and “there is no way I’m eating that,” the panel warmed to the product—and panelist and Dallas Mavericks owner Mark Cuban agreed to invest $50,000 for a 15 percent stake in the business (“Let’s eat some crickets,” he told Crowley).

“It's a solution to a problem,” Cuban said via Twitter. “We need better sources of protein and over time I think consumer habits will change.”

In fact, Chapul is just one of a dozen or more new companies attempting to change the way Americans look at bugs. Brooklyn-based Exo is making protein bars, Boston-based-Six Foods is planning to sell tortilla chips made from cricket flour, and All Things Bugs, an Athens, Ga., based firm founded by an entomologist, is looking to sell its own cricket flour to this burgeoning market. EnviroFlight in Ohio and AgriProtein in South Africa, meanwhile, are among at least four companies globally producing insects for the pet food, aquaculture or animal feed markets.

The big opportunity they see: the consumption of insects as protein is much less taxing on the environment—growing, harvesting and processing them takes far less resources than chickens, cows and pigs, one percent of the greenhouse gasses of cattle and 100 times less water—so they tap into the current sustainability craze. They're rich in protein and other key nutrients like omega-3 acids. And the products can be made at a low cost—until now, with very little competition.

But convincing Americans to eat anything containing creepy crawlers is not an easy sell. Unlike the developing world, where the U.N.’s Food and Agriculture Organization estimates that two billion people depend daily on as many as 1,900 insect species for food, Americans and much of the West have long considered spiders, grasshoppers, crickets, flies and bees to be a nuisance that must be swatted away or stamped out.

But Crowley and other edible insect aficionados are counting on younger, environmentally-conscious Millennials to move the sector beyond gag gifts like lollipops with scorpions or one-off bug buffets to become a staple in health food stores, snack stands and the larger food chain. The key, they say, is playing up the health benefits of eating products with insects while emphasizing bugs' small environmental footprint.

“We are trying to set up future generations with a more sustainable food system, one that is more resource efficient and one that is more adaptable to a more changing climate,” Crowley says.

Rose Wang, co-founder of Six Foods, which in May raised $70,000 on Kickstarter to make its Chirps cricket chips and hopes to have the product in stores by fall, agrees. “It's all about the vision of what eating insects can be,” Wang said in an e-mail interview, pointing out that the bugs are high in protein, low in fat, and can be raised humanely in small spaces, without antibiotics or growth hormones. "There is no question that insects are the most humane way to eat meat," she says, "And as people become more cognizant of where their food comes from and how it is produced, they are becoming more open to new sustainable foods like insects.”

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Glen Courtright, CEO and founder of EnviroFlight, is going even further with the environmental approach. His company takes some of the estimated 36 million tons of food waste that ends up in landfills each year and feeds it to the larvae of black soldier flies. A protein meal and oil derived from the dehydrated fly larvae are then packaged and shipped to the pet trade--as well as fish and pig farmers who are clamoring for a protein substitute for fishmeal, which comes from already overfished oceans.

EnviroFlight is also partnering with the feed industry around the world to provide its technology and know-how on raising insects for animal feed. Courtright expects to see growth of 50 percent this year, adding that he is struggling to keep up with demand.

“Big business understands there has to be a fish meal replacement, a sustainable fish meal replacement,” said Courtright, who initially explored producing oil from insects, bacteria and then algae for biofuels before shifting to the feed sector. “They are seeing the viability of the product and they are understanding insect technologies are real and they are coming.”

But will insects catch on as pizza did after World War II or sushi did in the 1970s?

Some experts think the deluge of new insect-related companies could be a turning point in entomophagists' (that's those who advocate for insects as food) decades-long battle to get the six and eight-legged critters onto the plates of consumers.

“This is more than a blip. This is the beginning of a curve that will go steadily up,” said Montana State University Associate Prof. Florence V. Dunkel, a leading edible insect expert who organizes an annual bug buffet on campus each year featuring delicacies like wax moth larvae quesadillas, curried mealworms and Chinese stir fry made with crickets.

“There was the environment," she says, ticking off forces that are driving interest in the new food group. "There was the need to have more nutrients. And then there was the openness of the Millennial generation to search out better ways to live,” she added. “It’s a no-brainer to begin to incorporate insects into our diet as a protein source.”

But while Dunkel predicts that shoppers in the next few years could find bags of frozen moth larvae next to the frozen shrimp, others, including the FAO, are more cautious. They say consumer products will remain a “niche market” for at least another generation, mostly attracting thrill-seeking Westerners as well as immigrant communities in the West pining for traditional insect favorites like grasshoppers from Mexico or Mopane worms from southern Africa.

The FAO’s Paul Vantomme, who coordinates the agency’s insect program, says he thinks the greatest potential is in the animal feed sector, noting that insects could represent up to 10 percent of the 150 million tons of protein sold each year in two decades. The insects would replace fishmeal and supplement soybean meal, Vantomme said.

“China imports 30 million tons of soybean meal in order to supply its chicken and pig farms,” Vantomme says. “The average Chinese eats meat once a week, and that is expected to double in the next five years. That means they will be importing 60 million tons. Even China is looking for alternatives for these imports. For them, it’s a big problem.”

EnviroFlight's Courtright also says he expects the animal feed sector to offer the most potential for investors. “For animal feed, definitely. For human feed, I don’t think the West is ready,” Courtright says. “We’re not that hungry yet. We are not starving and insects are not part of our culture.”

Some of that trepidation was on display the other day at Fortune when several reporters said they were scared to even try samples of the Chapur coconut, ginger and lime or the peanut butter and chocolate bar. Much of the apprehension came from expecting to bite into a cricket, as famously seen on the TV show Fear Factor, although the bars have no visible cricket parts and lack the woodsy flavor of chirping insects. The taste and consistency are closer to a chocolate or tropical power bar.

A few blocks away, the bars were on sale at midtown Manhattan's Westerly Natural Market natural foods store. Positioned alongside a protein bar featuring Chia seeds and another one claiming to save lives with each sale, staffers said the Chapul cricket bars were selling mostly to “hard-core” customers trying to tap into the latest health food trends. Sales have been slow due to limited marketing and the foreign concept of edible insects, they said.

For his part, Chapul's Crowley has grown accustomed to the naysayers and acknowledges he still has work to do to help consumers overcome their fears of eating products like his with insects. But he believes his company has plenty of room to grow, predicting that it could see $1 million in revenue in 2015 and more than $10 million in five years.

“I have no doubt that the industry will continue to grow,” Crowley says, noting that he expects Chapul to be in 10,000 stores in five years. "We need to diversify our food system," he says. "We are not trying to eliminate food sources. We are just trying to add insects to the menu of the American diet.”

Editor’s note: An earlier version of this story incorrectly stated that All Things Bugs is based in Gainesville, Fla. The company is based in Athens, Ga. The story has been updated to reflect this.